IRS Tax Year 2023 Inflation Adjustments

By Chris Keegan, CPA-Austin

The IRS recently released annual inflation and cost of living adjustments for the upcoming 2023 tax year. 

Inflation adjustments were released in Revenue Procedure 2022-38 and they impact over 60 tax provisions. Many of these adjustments are significantly larger than usual this year given the current high rate of inflation.

These changes impact many common income tax items, including:

• An increase in the standard deduction to:
  • $27,700 for married couples filing jointly
  • $13,850 for single taxpayers and married individuals filing separately
  • $20,800 for heads of household
• Adjustments to the marginal tax brackets with the highest bracket of 37% now beginning at $578,125 for single filers and $693,750 for joint filers
• An increase in the lifetime estate exclusion to $12,920,000
• An increase in the annual gift exclusion to $17,000

For a full listing of all changes visit:

• IRS Provides Tax Inflation Adjustments for Tax Year 2023
• Rev Proc 2022-38

In addition to the inflation adjustments noted in Rev. Proc. 2022-38, the IRS has issued guidance for pension related cost of living adjustments. These adjustments include:

• An increase of the limit on deferrals into 401(k) and 403(b) plans to $22,500
• An increase of the 401(k)/403(b) catchup contribution amount to $7,500
• An increase in the IRA deferral limit to $6,500

Details on the pension related cost of living adjustment can be found here:

• 401k and IRA Limits Increase
• Notice 2022-55